Photo: Mark Sandgren and Dominic Cantone. Photo by John Kruger
National insolvency firm Oracle Insolvency Services has been appointed to liquidate two of the five Original Pancake Kitchens in Adelaide.
The iconic Original Pancake Kitchen, in the heart of the CBD, will remain open along with restaurants at Marion and Modbury. Unfortunately, a recent fire and ongoing economic challenges have led to the closure of sites in Reynella and Port Adelaide.
Oracle Insolvency Services Partner Dominic Cantone has been appointed to dissolve the two restaurants and help consolidate the business.
The five restaurants in the Original Pancake Kitchen chain are all operated by Director Mark Sandgren. He took over the Gilbert Place diner in 2017 and moved to gradually expand the business with the Marion diner opening three months ago.
“COVID hit us hard and we borrowed to stay afloat. People deserted the CBD but when restrictions eased we found they were supporting local venues which is why we were confident in our expansion into the suburbs,” said Mr Sandgren.
“Post COVID, the cost of doing business has gone through the roof. Our gas bill has almost tripled from $5,000 a quarter to $14,000. Interest rate hikes mean many families think twice before going out to eat and we’ve suffered a decline in customers. More people are staying home and cooking comfort food such as pancakes themselves.
“We were devastated last month when a fire tore through the kitchen of the Reynella diner. Thankfully, nobody was hurt but the damage was extensive and we had to close. The fire has forced us to take a hard look at our business across the board.
Mr Cantone, who is one of South Australia’s top insolvency practitioners, said many hospitality businesses are struggling under the increasing pressure of rising utility bills.
“We are all paying more for electricity and gas but it’s particularly tough for restaurants and cafes,” said Mr Cantone.
“If you can’t reduce costs, then inevitably you have to pass them on to survive by increasing the price of items on your menu. We don’t have to go out to eat and if your customers are also having to pay more to run their households it’s a discretionary expense that’s the first to be cut when budgets are tightened.”
Mr Cantone is working to get a full understanding of the situation but said he expects debts to exceed $250,000.
The ATO is the main creditor and there are also some suppliers owed money who continue to supply to the remaining Original Pancake Kitchens. Unfortunately, about 30 workers have lost their jobs and their entitlements have all been paid.
“As with many hospitality businesses where the operator doesn’t own the building, there are not many valuable assets to sell to pay creditors,” said Mr Cantone.
“We believe we’ll see more restaurants and cafés driven to the brink and beyond as they struggle to recover from the economic effects of COVID in an environment of rising costs.
“It is vital that any business feeling the pressure seeks help before it is too late. There are ways you can prevent insolvency such as a Small Business Restructure but there are strict conditions.”
Mr Sandgren said: “The Original Pancake Kitchen dates back to 1965 and is an institution. There is a real sense of nostalgia. Just about everyone I’ve met in Adelaide has a memory of eating at the Gilbert Place diner. It is still open 24/7 and I hope with the support of South Australians that will continue.”
Oracle Insolvency Services is based in Adelaide with offices across regional SA, in each interstate capital city and in Darwin.
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